An approach is needed which addresses the value outcomes across the social, economic and environmental spheres in a comprehensive manner, writes SANDEEP GARG. The Covid-19 outbreak has significantly impacted the economy, impacting economic growth and employment. This has forced all sectors to re-orient and reinvent themselves, and this is particularly true of the infrastructure sector. While infrastructure companies strive to execute projects during this challenging period, the government has responded with several measures to address the economic slowdown. The National Infrastructure Pipeline (NIP) envisages an infrastructure investment of `111 trillion over the five-year period (FY2020-25). This includes Rs.20 trillion in the roads sector, Rs.27 trillion in the energy sector and over `13 trillion in the railways sector. The government has also laid out the National Monetisation Plan (NMP) from FY2022-25 to unlock the value of investments in public sector assets by tapping private sector capital and efficiencies. The proceeds of such monetisation – targeted at `6 trillion – would be used for augmentation or creation of greenfield infrastructure. Social value Investments at such a mammoth scale across sectors provides an opportunity to maximise public or social value, ie, investments that deliver the best solutions to support the public good. Social value, in the context of infrastructure, refers to all the impacts that an infrastructure project has on society and the value that these impacts have, both positive and negative. This includes impacts on the infrastructure industry itself, such as benefits to businesses and employees, as well as benefits to wider society. Such impacts could include: Improved local environment, reduced congestion, enhanced skills and knowledge, sustained employment, reduced waste, etc. A more informed civil society in a democracy is also demanding such outcomes. Globally, institutional and private investors are now targeting their capital to sectors and companies who are proactive in addressing such outcomes through their Environment, Social and Governance (ESG) activities. The government’s initiative on creating an institutional structure in the country to tackle the quantum of NIP funding would need to consider this aspect as well. Historically, infrastructure projects were evaluated on a cost-benefit assessment framework which focused on the economic impact of an infrastructure project. That approach has been modified in many countries to include the impact on social values. For instance, in the UK, under The Public Services (Social Value) Act (2012), public bodies are required to consider whether they can secure added economic, social or environmental benefits for their local area when they are procuring services. This ensures that social value is now a key consideration in public sector procurement decisions in the UK, and thus a factor in the way projects are planned and implemented. In the Indian context, such an approach, where a holistic social value impact assessment is carried out for new and existing projects is particularly important. Often, infrastructure projects address the needs of users who may not be local residents – for instance, an inter-city expressway, or long-distance transmission network. However, their creation includes substantial disruption in the lives of local residents – from acquisition of their land, shifting of homes and community assets like temples and schools, potential loss of livelihood, etc. Direct monetary payment to the affected people is only one aspect of compensation. For many, the disruption to their lives may be far deeper. A comprehensive approach The Indian infrastructure sector is awake to this issue and has been tackling this issue through various means. Project appraisals, particularly at the NHAI-level, consider the socio-economic impact. Many government tenders mandate the minimisation of polluting activities, proper waste disposal and encourage use of environment-friendly materials. Private companies executing these projects work with local communities to address their immediate health and educational needs through their Corporate Social Responsibility (CSR) initiatives. Such activities demonstrate the commitment of the sector to address the issue. However, an approach is needed here which addresses the value outcomes across the social, economic and environmental spheres in a comprehensive manner. While there could be a legislative component to such an approach, there are steps which can be taken by the industry even in its absence. These steps are spread across the project appraisal stage, project execution stage, and project operation stage. During the project appraisal cycle, the aim is to utilise a framework to evaluate the social impact integrated with the financial outcomes. While there are several such approaches that are used globally, like ‘multi-criteria analysis’ and ‘cost-utility analysis’, companies need to select a framework that is tailored towards the conditions and needs of projects of the region. With the help of technical consultants and NITI Aayog, there are chances that companies can collaborate to develop such a comprehensive framework for projects in India. For the next cycle, project execution and operation the framework will be utilised to measure and track the social values’ impact across various phases. This will require development of a robust set of standards to measure social outcome. The NIP and the associated NMP are ambitious programmes that cater to world-class infrastructure for the common citizen. Delivering on the goals of these programmes require the development of competencies in technical capabilities, innovative financing, as well as measuring and enhancing social value of infrastructure projects. Moreover, coordinated efforts between all stakeholders are required and essential if India hopes to see its infrastructure sector deliver greater social returns, inclusive growth, and turn into a tangible legacy. About the author: Sandeep Garg, CEO & Managing Director, Welspun Enterprises, has been associated with the Welspun Group since July 2012 and also serves as the Managing Director of Adani Welspun Exploration. He has over 37 years of experience.